Blocking of Russians and a record number of hacks. Main events of the week

Bitcoin has fallen by 1,45% over the past seven days. The asset reached its highest values on October 7, when BTC was trading at $20 068. The lowest values were registered on October 13 - $18 190 per one coin. As of September 14, 11:00 UTC, bitcoin exchange rate is $19 679 (according to Binance).

On October 10, bitcoin's mining difficulty reached a new all-time high of 33,73T. The average hashrate of the network rose to 263,5 EH/s.

The value of the second most capitalized cryptocurrency, Ethereum, has declined 1,93% over the past seven days to $1329. The native token of the cryptocurrency exchange Binance (BNB) has gained 4,85% and is trading at $274,5.

The BNB Chain, developed by Binance, completed its 21st quarterly BNB burn on October 13. 2 065 152,42 BNB worth $574,8 million were taken out of circulation.

The total capitalization of the crypto market fell from $0,996 trillion to $0,962 trillion for the week, with bitcoin dominating at 38,6%. Ethereum's share is 16,17%.

Crypto projects hacks

According to analytics company Chainalysis, the first half of October was a record for the number of attacks committed against cryptocurrency projects. About $718 million was stolen from DeFi protocols in 11 hacks. If this trend continues, 2022 will surpass 2021 in the number of hacks and will become a record for the entire history of observations. To date, analysts have recorded 125 attacks for all time, so far in which hackers have managed to steal more than $3 billion.

On October 10, hackers attacked the XEN Crypto (XEN) project on the Ethereum network. They took advantage of a vulnerability that allowed more than 100 million XEN tokens to be issued through a deployed contract and transactions from the FTX crypto exchange. The project was also attacked by Sybil, which used fake P2P identifiers to create fake addresses that could perform or approve transactions.

On October 7, hackers withdrew more than $100 million in cryptocurrency from the BNB Chain blockchain. They exploited a vulnerability in the BSC Token Hub cross-chain bridge and were able to conduct a double-spending attack. On October 12, the developers conducted a Moran hard fork to fix the vulnerability.

On October 12, the audit firm OtterSec reported a hacking attack on Mango's DeFi-platform on the Solana blockchain, which also resulted in the project losing more than $100 million in cryptocurrency.

New blocking of Russians

Russian users of the Finnish cryptocurrency exchange LocalBitcoins began to receive emails about the termination of service. An exception was made only for people with dual citizenship of the European Economic Area (EEA) and Switzerland. Russian clients will be able to withdraw funds in one transaction, after which access to their wallets will be closed. This is reported by the publication DeCenter.

Blockchain explorer and cryptocurrency wallet service Blockchain.com also began blocking Russian users under the eighth package of EU sanctions. Customers can withdraw funds until October 27, after which their accounts will be blocked. Accrual of rewards for users from Russia has already been stopped. The blocking will only affect custodial accounts.

On October 14, crypto exchange Crypto․com also sent out letters to Russian users with a notification about blocking their accounts in accordance with the sanctions. The ruling takes effect immediately. It is still unknown whether the users have the opportunity to withdraw their funds.

From the world of mining

Kazakhstan’s lower house of parliament approved in the first reading the bill on the regulation of digital assets and mining. Quotas may be introduced for miners of cryptocurrencies, as well as mandatory registration and licensing. In addition, miners would be obliged to exchange up to 75% of their capital on local cryptocurrency exchanges. Miners' remuneration will be subject to corporate income tax, tax on income of the mining pool, and fees on transactions on exchanges.

In September, one of the largest US mining companies, Marathon Digital, doubled its bitcoin mining from the previous month. The value of bitcoin assets rose to 10 670 BTC (~$210,4 million as of October 14). The company mined 616 BTC in Q3 and also moved some of its infrastructure from Montana to Texas.

The Norwegian government is considering a proposal to eliminate the preferential electricity tax rate for miners. Authorities have cited a shortage of the resource for other industries and individuals. The tax rate could be raised to the level at which other service industries are taxed.

Binance launched a $500 million project to finance the mining industry and digital infrastructure providers. Loan terms range from 18 to 24 months and interest rates range from 5 to 10% per annum.

Russian crypto market news

The Ministry of Finance of the Russian Federation warned that storing savings in cryptocurrencies is very dangerous and associated with high risks of losing money. According to Deputy Finance Minister Alexey Moiseev, the main dangers are related to the high dynamics of quotations and the technological structure of cryptocurrencies. Moiseev clarified that cryptocurrency may be considered “only as an element of foreign exchange settlements,” when other ways are limited by sanctions.

Brokers may appear on the Russian market of digital financial assets (DFAs) to perform secondary transactions in the over-the-counter (OTC) segment. The entry of brokers into the OTC segment is possible in the absence of a regulatory framework regarding DFA exchange operators. The Bank of Russia also noted that the current legislation allows only OTC trading, while secondary trading is allowed through exchange operators, but there is not a single organization in the relevant register of the Central Bank.

In Russia, street currency speculators began exchanging USDT for cash dollars. One of the “exchange offices” was seen in Sochi near the city market. According to the seller himself, he calculates the rate based on the Binance cryptocurrency exchange indices and hands over the cash when the funds come to his address.

CBDC news

India's central bank announced the launch of a digital rupee prototype. The regulator noted that information on the functions and benefits of the new asset type will be published periodically. The central bank also added that the asset could be used for both retail and wholesale payments.

Michael Saylor, former head of MicroStrategy, said that central bank digital currencies are unstable and doomed to fail. In his view, bitcoin could become a better form of money due to the fact that it is a scarce asset.

Bank of China reported that the volume of digital yuan transactions exceeded $14 billion. The asset is the world's largest CBDC by this measure. It is currently undergoing a pilot phase and is accepted in more than 5,6 million outlets. The project has been successfully implemented on electronic government services platforms. In particular, it is used to pay for utilities and various social payments.

The Terra situation

Community members of the original Terra ecosystem, which was renamed Terra Classic after the hard fork, created a petition calling on U.S. cryptocurrency exchange Coinbase to list the project's native token, Luna Classic (LUNC).

The TerraClassicUSD (USTC) asset price rose 57% to a one-month high after the community accepted Bitcoin Suisse AG senior developer Tobias Andersen's proposal to re-peg the coin to the US dollar.

The adoption of cryptocurrencies continues

Cryptocurrency exchange FTX entered into a partnership with Visa payment system. The cards are already available in the United States and will soon be launched in more than 40 countries in Latin America, Europe and Asia. The next phase of implementation is expected in Europe by the end of 2022.

About 94% of state and local government pension funds in the United States invest in cryptocurrencies or companies related to this field. State-sponsored pension funds invest in one or more cryptocurrencies, justifying their decision with the fact that this asset class has shown impressive returns over 12 years.

Ripple signed contracts to provide its On-Demand Liquidity (ODL) service to companies in France and Sweden, which are payment providers Lemonway and Xbaht. Previously the service was not available in these countries. RippleNet's ODL will allow companies to make instant transfers using the XRP token, backed by Singapore-based cross-border payment center Tranglo.

Google announced the possibility of paying for cloud services with cryptocurrency. This payment method will appear in early 2023 and will be available to a limited number of customers at the first stage of the launch. The initiative is implemented in cooperation with the cryptocurrency exchange Coinbase, which, in turn, will use Google's cloud infrastructure in its work.

The oldest bank in the US, Bank of New York Mellon (BNY Mellon), began providing BTC and ETH custody and transfer services for some customers. It uses a single platform to handle cryptocurrencies and traditional financial assets. BNY had previously received permission to do so from New York's financial regulator.

Payment companies Visa and Mastercard, in partnership with MinePlex, a cryptocurrency startup, will develop a technology for conducting crypto transactions. The company’s product, called MinePlex Banking, will allow millions of users to make fast and secure digital transactions with bank cards, mobile applications, and cryptocurrencies. In partnership with Visa and Mastercard, CrossFi, an acquiring service will also be launched that will allow accepting USDT, BTC, ETH, and TRON cryptocurrencies.

JPMorgan, a financial holding company, and Visa will join forces to work on streamlining cross-border payments using their private blockchains, Liink and B2B Connect. The main goal of the joint project is to reduce the number of failed payments related to incorrect account information. Deutsche Bank has already joined the ranks of the project's founders.

The UK government passed a bill under which blockchain technology will be used as a solution for storing documents. It will make digital documentation legally recognized, reduce administrative costs and facilitate cross-border payment processes for British firms.

NFT and metaverse news

Japanese video game developer and publisher Konami began searching for specialists in Web 3.0, metaverse, and NFTs to launch a blockchain platform for trading in-game tokens.

On October 10, the American TV channel CNN announced the closure of its NFT project Vault. It issued tokens associated with key news events. The Vault website will undergo changes but will remain available to view collections and use as a trading platform.

Cybersecurity experts at BleepingComputer warned of a fake security update for Phantom cryptocurrency wallets on the Solana blockchain. Hackers were sending out NFTs containing malicious code under the guise of a wallet update.

Brian Roberts, CFO of NFT marketplace OpenSea, resigned from his post. The specialist stressed that he was optimistic about Web 3.0 and OpenSea, adding that he would remain with the company as an advisor.

Predictions on cryptocurrency rates

Experts from analytical company Arcane Research noted that the correlation of Open Interest (OI) in futures and perpetual contracts on bitcoin and Ethereum to their capitalization reached a new high. According to experts, amid the current consolidation, this could be a sign of a sharp increase in volatility in the near future.

Analysts at Bloomberg indicated that the volatility of BTC fell to its lowest level in 2 years. Experts pointed out that bitcoin has been trading in the range of $20 000 for the past four months. At the same time, the indicator, known as the Bollinger bandwidth, narrowed to the values of 2020. Over the past two years, the indicator has narrowed to such values five times, in four cases, BTC has lost almost 16% in 20 days, and in one case, the price of the asset soared to $69 000, which was an all-time high.

According to Canadian businessman and investor Kevin O’Leary, the support of US policymakers could trigger an influx of institutional capital into the crypto market, sparking the growth of bitcoin. He added that the first cryptocurrency will remain in the $17 000 to $22 000 range until US authorities begin to regulate stablecoin.

Anatoly Yakovenko, the co-founder of the Solana blockchain, said that markets continue to fall as the US Federal Reserve System (Fed) continues to tighten monetary policy by raising rates. In his opinion, rates will rise for another 12 to 18 months, which means the cryptocurrency bear market will last as long. But Yakovenko is optimistic about the future and thinks that teams that create really important products will survive this downturn.

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